Stacking DAO points: How to best measure community participation

Stacking DAO is the leading Liquid Stacking Protocol on Stacks. You can compare it to the Lido or Jito of the Stacks chain, a Bitcoin L2.

The experience of stacking STX is not straightforward, but Stacking DAO offers a unique solution to deposit STX tokens for stSTX, an auto-compounding tokenized version of stacked STX.

This method enables users to earn up to 10% yield on STX while enjoying the possibility of interacting with DeFi and Web3 via stSTX.

Stacking DAO started with a grant from the Stacks Foundation to fund the initial protocol development. Yet, the ultimate goal is to make the protocol as decentralized and community-centric as possible, reflecting the core values of Web3.

For this reason, Stacking DAO has introduced a points system to incentivize actions that are valuable for both the protocol and the Stacks DeFi ecosystem while enabling the evaluation and finding out which community members contribute the most to Stacking DAO’s success and growth.

But why use points?

In the last few years, in the process of decentralizing the community or rewarding users, many Web3 applications have used traditional incentive approaches such as airdrops and NFTs.

The goal of these mechanisms is to:

• Reward loyal and valuable users
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• Distribute governance rights to the community
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• Gain attention faster, increase adoption, and bootstrap network effects

For example, one of the most famous airdrops was done by Uniswap, in which eligible users received thousands of dollars because they interacted with the DEX.

But most of the time, these attempts have failed in achieving the original goals

These traditional incentive approaches have usually not taken into account who the actual loyal users are and how they are bringing value to the community

For this reason, many protocols ended up rewarding users who were chasing a quick way to earn a buck but were never interested in the actual success of the protocol.

In fact, it’s not uncommon to witness a large number of users leaving the community, a decrease in transactions, and a stall in growth right after rewards have been distributed.

All of this happened due to the absence of differentiation between genuine and casual users.

This issue can be solved by having clear criteria for evaluating community participation and contribution.

The perfect way to do this is through a point system.

For instance, Arbitrum was among the first to adopt this trend.

Instead of distributing tokens to all participants indiscriminately, they allocated them based on assigned points, which were earned through specific actions. These actions included conducting transactions over multiple months, the number of transactions completed, the total dollar value of transactions, and other relevant measures.

A recent protocol that launched a successful point system was Jito on Solana. Users would receive daily points for each SOL staked on their platform, while extra points could be earned by using JitoSOL on various Solana DeFi platforms or through referrals.

Genuine Jito users have tremendously benefitted from this point system, but it also helped Jito create a strong brand, reputation, and adoption over multiple months.

As expressed before, one of the benefits of using points is making sure that the interests of both protocols and the community are aligned.

Actually, a Nansen on-chain analysis on the outcome of the Arbitrum airdrop suggests that on-chain growth metrics have kept improving even after the rewards have been distributed.

Even according to Multicoin Capital, the points system is a trend to monitor for 2024 as it enables rewarding users based on what they actually earned and deserve, while protocols can incentivize valuable actions

In conclusion, points are the optimal solution and an improved system to traditional reward mechanisms because they allow:

• A data-driven approach to measuring community participation
• Measuring the ROI of activities and iterating on incentivized actions
• Experimentation of new reward distributions

How do StackingDAO Points work?

There various options to earn points on StackingDAO are:

• Holding stSTX:
  Earn 1 point a day for each stSTX owned in your wallet (e.g. holding 100 stSTX will earn you 100 points on a daily basis)
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• DeFi Activities with stSTX:
  Earn 2.5 points daily for each stSTX/STX LP token on Bitflow, while those lending stSTX will collect 1.5 points every day. Right now, we are currently tracking ALEX, Arkadiko, and Bitflow, but expect more protocols to be added
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• OG and Genesis NFTs:
  If you participated in the first stacking cycle, you will receive Genesis NFT, which will act as a points multiplier
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• Referrals:
  Earn 10% of the points each user you referred to StackingDAO earns. (e.g. if your referee earns 1000 points, you get 100 points). Referrals are a great way to onboard your Web3 friends in the community, introduce them to Stacks, and get extra points for the hustle

If needed, you can learn more about the points system in our documentation.

Furthermore, you can now check the amounts of points you have accumulated on the StackingDAO dashboard. In this way, you can monitor the points received via stacking or through referrals at any moment and check the total number of points issued to the community.

The dashboard will be updated on a weekly basis, and a leaderboard will be soon available so anyone can check their position with respect to the rest of the community.

Stacking DAO Details:

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